Finance or not new car when planning to buy a house?
I have 50k in savings and need to buy a new car to go to work. Car costs around 13-16k. I can pay it directly or finance it (6k paid directly and then about 80€/month).
But I am planning to buy a house (200k-300k) and usually you require minimum 10% to start with...
Financially what would be better?
A) Pay in cash and have about 35k to buy the house?
B) Finance car, try to buy house with 44k, and then try to get rid of car finance asap?
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Assuming that you can afford the monthly payment on a 180k mortgage, and taxes, and utilities, and and maintenance costs...
Buy the car with cash. Then either save up the money again for the down payment or buy a smaller house (in the US you can avoid private mortgage insurance by putting at least 20% down - I don't know if there's a similar point in Spain).
If you finance a car now and buy a house, you'll have two large monthly payments to deal with, which might leave you cash strapped for your day-to-day needs.
If it was me, I would much less of a car and pay cash. Then try and go and buy a home.
One is always better off paying cash unless you can get an extremely high negative interest rate. That is they pay you to take the loan.
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